(Sharecast News) - International insurance giant Prudential has approved a capital increase for its business in Mainland China to drive growth.
CITIC-Prudential Life (CPL), a 50/50 joint venture with China's CITIC Bank, is increasing its registered capital by RMB2.5bn ($351m), with each shareholder contributing an equal amount in cash.
The result will see CPL's registered capital rising from RMB2.36bn to RMB4.86bn ($682m), which Prudential said "underscores the common belief of both shareholders in the attractive long-term prospects of life insurance business in the Chinese Mainland".
Prudential is funding its share of the capital increase from its free surplus of $8.3bn, reported at the time of its half-year results, which it said will be used for future growth opportunities.
"We are building a sustainable growth platform through targeted investment in structural growth markets. CPL plays a pivotal role in our overall strategy and growth, and we will continue to focus on delivering our customer-led and multi-channel distribution strategy in the Chinese Mainland," said Prudential's chief executive Anil Wadhwani.
"We are confident that the continued focus on quality establishes a good foundation for future growth, and we remain excited about the significant potential of the business."
The CPL division accounted for annual premium equivalent sales of $394m in the first half of 2023, down 17% year-on-year at constant exchange rates, but still the second largest contributor to the group's APE sales. Adjusted operating profits before tax from the division were $164m, up 32% year-on-year at constant exchange rates.
Prudential's shares were up 2.2% at 882.4p in early deals on Wednesday.
Prudential (PRU)